After Buying Sprint, SoftBank's Masayoshi Son's Vision: To Be The World's Number One Company

“What is work? It is thinking until you feel your brain is coming apart.”

This is the exhortation that
Softbank’s legendary founder and CEO Masayoshi Son (56) delivered this month to an incoming class of young SoftBank employees. We might also guess that it is something he not only preaches, but himself practices.

Few would dispute that Son’s leadership has been anything other than brilliant, bold, and—recently at least--spectacularly successful. As is said of Warren Buffett, his success may be a matter of personality and temperament, as well as towering intelligence, rather than technique, i.e., imitable.

But Son has inspired a generation of emulators, not only in Japan but throughout Asia. One acolyte was Jack Ma, CEO of soon-to-IPO in New York Chinese internet giant Alibaba Group Holding, in which Son invested $20 million 14 years ago and SoftBank holds a 37% stake.

A series of recent Nihon Keizai Shimbun articles, including some penned by Son himself, relate Son’s management philosophy, style, and vision.

His pioneering spirit (easier for Son, perhaps, as an ethnic Korean, who only acquired Japanese citizenship in 1990), determination, and over-achievement were evident early. Venturing to the U.S. by himself at the age of 16 to attend high school, he continued study economics and studying computer science at UC Berkeley, earning a B.A. in 1980. Returning to Japan in 1981 he founded a software wholesale company called SoftBank Japan.

By means taking huge risks and aggressive buying and investing in start-ups (many of which crashed and burned, leading to huge losses dot.com bust of 2000), Son has built a Group comprising 1300 companies. Now, when addressing recruits, he proclaims his goal in the simplest terms: “To be the world’s Number One Company.”

In 2006 Son bought Vodaphone Japan (now SoftBank Mobile) from its British parent. In 2008 SoftBank Mobile entered a partnership with Apple to bring the iPhone (3G) to Japan.

On July 10, 2013, Son closed his biggest ever acquisition, the $21.6 billion investment in 72% of the shares of Sprint Corporation (NYSE:S). (Son installed himself as chairman of the company with Robert Fisher, director of SoftBank and president of SoftBank Holdings Inc., as vice chairman.) Through subsequent purchases SoftBank’s ownership in Spring has increased to 80%.

With the Sprint acquisition, SoftBank’s interest bearing debt tripled to some JPY 7 trillion (US$69 billion), about the same amount as losses incurred in 2000, evidencing that Son has lost none of his tolerance of risk. Further, in signature style, for Son the Sprint purchase is a platform and vehicle for further quantum growth.

Last December the Nihon Keizai Shimbun reported that Son had hired bankers to raise JPY 2 trillion ($19 billion) to fund a Sprint acquisition of T-Mobile (NYSE:TMUS). Sprint—into which SoftBank contracted to invest $5 billion in new capital, $1.9 billion at closing--would be the borrower.

In an April 2 interview in Nikkei Sangyo Shimbun, posted on the April 12 on-line Nihon Keizai Shimbun, Son was asked why SoftBank was expanding business at such a torrid pace. His answer: “A company’s value is determined by challenge and evolution. A company that only defends whatever it has achieved will not grow bigger and stronger; it will only sink below an evolving world above.”

Asked how one can keep “challenging and evolving” Son replies:

“In my own work, I have practiced a few secrets. One is: ‘Think until your brain seems to be coming apart.’ When I was about 19 and studying in the U.S., I practiced the discipline of every day devoting five minutes to coming up with a new concept. In one year I produced 250 ideas for which I could apply for patents. One of them was a audio-response multi-language translation device of which I went as far as developing the prototype and earning JPY 170 million ($1.1 million).

“This evening, take a stop watch and clock five minutes to conceive of something new in the world. A new type of water faucet, a new type of automobile windshield wiper, anything is okay. Think until it seems your brain will come apart. Even if your ideas cannot be turned into products, you can be sure that the idea will be useful to you in your life.

“When we were founding SoftBank, we came up with about 40 ideas for the kind of businesses we should develop. It is probably true that any that we would have chosen would have become number one in Japan, and could have aimed to become number one in the world. That is the kind of expansive thinking we were doing.”

Asked how he decides to launch multi-trillion yen acquisitions, Son replies:

“It is not a matter ‘We have money, so we set up businesses’; it is ‘What do we want to do’—the key is the deciding on the business. At SoftBank we decided to develop in the mobile internet space, believing we would be bringing happiness to people through the information revolution. Acquiring Vodaphone’s Japan subsidiary for JPY 2 trillion was a big gamble, but this was a necessary decision if we were to enter the mobile phone business.

“In this case I got encouragement from my colleague, Tadashi Yanai, chairman of Fast Retailing (OTCPK:FRCOY). Yanai-san stated forthrightly: ‘If you truly intend to charge into mobile networking, the risk of not buying Vodaphone’s Japan subsidiary is greater than the risk of buying it.’

“This is not recklessly charging into businesses; to do battle you need weapons.…”

To students, Son has offered advice that can be summarized as: “Do not limit yourself to thinking in the present. Think above and beyond. Do not be bound by this age; aim to create a new age that will delight people throughout the world.”

At a still spry 56, Masayoshi Son is still thinking “above and beyond” the present. Whether his vision for a Sprint-T-Mobile combination is realized or not, we can expect further bold, globe-crossing moves in the future.

Some data: Market value of Softbank stock traded on the Tokyo Stock Exchange as at April 14, 2014 was JPY 8,141 billion (USD 81 billion). Sales for the just ended fiscal year are expected at JPY 6,500 billion (USD 64 billion), up 92% YoY. Net income of JPY 450 billion (USD 4.45 billion) will be up 74%, and EPS up 45%. The TSE price-to-book ratio is 5.19 times; forward PER is 18.09 times. Softbank’s ADR is OTCPK:SFTBY.